With former President Donald Trump's announcement of his plan to reinstate new tariffs in early 2025, global financial markets experienced confusion and uncertainty. While these trade tensions negatively impacted some traditional assets, investors turned their gaze towards Bitcoin as a potential hedge against the decline in the value of the US dollar and global economic disruptions.
Global politics and its impact on the cryptocurrency market
Since the emergence of cryptocurrencies, their performance has been closely tied to the global geopolitical landscape. Sudden changes in economic policies, such as imposing tariffs or trade wars, often lead to fluctuations in cryptocurrency prices. This was evident with Trump's announcement of new tariffs on imports from China and other countries, raising fears of an all-out trade war affecting the global economy.
According to a report published by Coindesk, these tariffs may actually be 'good for Bitcoin', as interest in cryptocurrencies increases when investors lose faith in traditional economic systems. To read the report, you can visit the following link:
https://www.coindesk.com/markets/2025/04/01/why-trump-s-tariffs-could-actually-be-good-for-bitcoin
Why is Bitcoin considered 'digital gold'?
Historically, investors turn to gold during market disruptions, as it is a safe asset that maintains its value. Today, Bitcoin has emerged as a digital version of gold for several reasons, including:
· Limited supply: The number of Bitcoins that can be mined does not exceed 21 million coins, giving it a sense of scarcity.
· Decentralization: It is not subject to the authority of a central bank or government.
· Hedging against inflation: In light of central banks printing money without controls, some investors turn to Bitcoin to protect their assets from losing value.
As economic tensions rise, as seen in trade wars, interest in Bitcoin increases as a hedge tool that is not linked to the traditional financial system.
Bitcoin performance after Trump's announcement
According to a report by Economic Times, Bitcoin prices experienced a slight decline following the initial announcement of tariffs, but it was temporary, as the price rebounded due to increased demand from investors seeking a safe haven. To read the report, please visit the following link:
https://economictimes.indiatimes.com/markets/cryptocurrency/crypto-news/how-us-trade-wars-are-shaping-the-crypto-market/articleshow/118499286.cms?from=mdr
This pattern reflects behavior similar to what occurred during previous crises, such as the COVID-19 pandemic or the Russian-Ukrainian war, where Bitcoin prices rose concurrently with declines in traditional market indicators.
What does this mean for investors?
· Portfolio diversification: It is essential not to rely solely on traditional assets such as stocks and bonds, but to consider integrating digital assets into the investment strategy.
· Geopolitical analysis: Investors should follow global political and economic news, as they may provide early indicators of movements in the digital market.
· Taking advantage of opportunities: Temporary declines in Bitcoin prices, such as the drop that occurred after Trump's announcement, may present a buying opportunity for long-term investors.
How can Bitcoin be purchased?
For investors looking to enter the world of cryptocurrencies, Bitcoin can be easily purchased through reliable trading platforms, such as Binance. To learn the steps for purchasing, you can visit the following link:
https://www.binance.com/en/how-to-buy/bitcoin
Conclusion
It is clear that the world of cryptocurrencies is no longer isolated from global politics. In fact, the more disruptions in the global financial system, the more Bitcoin is seen as a hedge and alternative investment tool. While the future remains uncertain, monitoring political and economic developments and assessing their impact on the cryptocurrency market has become essential for any investor seeking to make informed decisions.
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As always, it is important to do your own research and consider your risk tolerance before making any investment decisions. Stay informed by checking the latest prices and market trends, follow me on social media, and consider taking advantage of the current market conditions to enhance your cryptocurrency portfolio.
Written by: Dr. Mohammed Al-Hamiri @AlhemairyM
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